When you buy your own home, you will invariably find that the mortgage lender you go through will insist that you have buildings insurance. Now, as a homeowner, there is no legal requirement to have buildings insurance, however, it is very advisable as, without it, you will have to pay for any damage that occurs to the property, right out of your own pocket.
The fact that this could amount to tens or even hundreds of thousands of pounds should tell you everything you need to know about the answer to the question in the title. Mortgage lenders insist on it as part of their application criteria because of the risk of not having it. Mortgage companies are in business to make money and they need to know that the money they lend you is going to get paid back.
So, What Exactly Is Building Insurance?
Not to be confused with building’s contents insurance that covers the belongings you have in your home, building insurance covers the structure of your property. If it’s part of your home and it becomes damaged, then you’ll usually find that by paying an excess, your building’s insurance company will foot the rest of the bill.
We’re talking here about anything from a broken wall to a complete rebuild of your home, so it’s understandable that mortgage lenders want their customers to have cover in place. It’s also why mortgage companies like you to have their buildings insurance – although that’s not a legal requirement either.
What Might Lead Me to Make a Claim on My Buildings Insurance?
Whilst it’s your responsibility to keep up the repayments on your mortgage, another condition of it will be that you have valid buildings insurance with someone. There are a variety of reasons why you might need to make a claim and they include:
● Fire, storms, explosions or floods
● Vandalism and burglary
● Burst or frozen pipes
● Fallen lamp posts or trees
● Vehicle collisions (depending on your home’s location)
Your Mortgage Company Will Want to Know if You Cancel it
Now, there are some people out there who take out their mortgage with the buildings insurance in place and then decide at a later date that they should cancel it. In fact, a frightening number of UK homeowners don’t have home insurance, which puts them at enormous financial risk.
Whilst you don’t have to tell your mortgage lender if you had no home insurance in place, they would likely take a dim view of it and insist that you get cover ASAP. The fact is that if your house was destroyed by fire, flood or anything else, you are liable to pay to have it repaired without cover in place. Unless you have a few hundred thousand pounds lying around, you should get some sorted and fast!
Get Building Insurance Today or Count the Cost Later
Getting building insurance is a bit of a no-brainer, as the cost pales into insignificance when compared to the alternative of having to pay for everything yourself. Your mortgage lender insisting that you have some in place is just prudence. Of course, as with any financial product, you should shop around and really delve down into what each policy offers you to ensure you get precisely the cover you need.
At Be Money Savvy, we are on a mission to ensure that as many as people as possible lead prudent financial lives and blogs like this one just serve to educate our readers. If you would like to know more about anything talked about here or about our comprehensive home and life insurance cover, visit us online at www.bemoneysavvy.co.uk.
Alternatively, if you would like a chat with one of our friendly experts about your building insurance needs, give us a call on 0161 537 0555 and we’ll be more than happy to help in any way we can. Thanks for reading. We’ll back with more sage financial advice again soon!